(Bloomberg Opinion) -- So Foxconn Technology Group may not make display panels in Wisconsin after all.
Those who’ve been following Foxconn for a long time won’t be surprised. Chairman and founder Terry Gou is as much a salesman as he is a manufacturer, having spent decades honing his pitch not just to clients but also governments.
Then-Governor Scott Walker, backed by President Donald Trump, loved exactly what he sold: the promise of thousands of jobs to make stuff in the U.S. Walker loved it so much that he pledged as much as $3 billion in sweeteners, a deal that likely cost him his governorship.
Now, according to a Reuters interview with one of Gou’s right-hand men, such plans to manufacture display panels may be scaled back or even shelved.
“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Louis Woo was cited as saying. Woo was one of the key architects and negotiators behind Foxconn’s deal with the state.
Foxconn’s Wisconsin-made screens likely would have been put into televisions. Woo this week admitted that “in terms of TV, we have no place in the U.S. … We can’t compete.”
If Foxconn can’t be competitive making electronics in the U.S., nobody can.
Woo’s admission doesn’t appear to come from any change in Foxconn’s deal with Wisconsin, or even any shift in the macroeconomic environment. It’s simply a matter of economic reality. The same reality that existed when Trump was handing out red truckers hats and promising to Make America Great Again.
Two years ago this week I wrote that Foxconn’s U.S. panel project didn’t make sense, evidenced by a comment Gou himself made saying that such plans weren’t a promise but a wish.
Wishes don’t always come true. I believe now, as I did then, that it would not be in Wisconsin’s interests to be closely tied to the flat-panel industry because it’s a highly cyclical, cost-sensitive business. One that would likely see massive job cuts not long after large-scale hiring.
Foxconn is now publicly conceding that manufacturing panels in Wisconsin isn’t viable, but still thinks it can hire just as many as originally promised. Instead of factory workers, Woo said they’ll hire for research positions as well as back-end packaging and assembly employees. Frankly, that’s wishful thinking because the U.S. doesn’t have much of a talent pool to dabble in these areas.
In 2018, the first year of the Wisconsin experiment, the company couldn’t even hit its employment target. Instead of creating a very modest 260 full-time jobs, Foxconn filled just 178 positions, Reuters reported.
Now that Foxconn is acknowledging the truth about manufacturing in America, it might be time for the country to face that same reality.
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Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
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